Case Study IKEA

Questions: 1. Investigate the vision and the strategy that is currently pursued by IKEA in the light of prescriptive versus emenrgent approaches to strategic planing? 2. Carry out a SWOT analysis for IKEA in relation with its competitors? 3. Critically assess the impact of the current strategic direction on the organisational structure of IKE? Answers: Introduction IKEA is one of the oldest and reputed companies that have been successfully serving the customers from different parts of the world. Due to an increase in the level of competition, the management has proposed to analyse the strategies that would improve the brand image and attract the clients. The vision and mission of IKEA has been to render quality services to the clients at a reasonably lower price. Strategic plan helps the management in analysing the challenges that can directly impact the performance of the company. The process includes drafting the best policies through which the changes in overpowering the level of competition can be drafted and implemented by the company. The company has introduced effective plans through which the sales can be improved. IKEA deals in the sales of various home products that are sold through the retail outlets that are located in different parts of the world. The furniture manufactured by the company is sold in flat boxes, which makes it quite unique. This has been one of the reasons that have contributed towards the increase of the sales of the products that has been manufactured by the company (Allen, Fournier, and Miller, 2006). 1. Vision and strategy of IKEA IKEA is a private company that specialises in the sales of home products like furnitures, bathroom accessories, and kitchen items. The company has retail stores in many parts of the world. Since its formation in the year 1943, the management has always amended the rules to serve the clients with the best buying options. The company has chain stores operating in Europe, Asia, Australia, and North America. The operational activities of the company have been divided into two parts, which are operations and franchising (Balmer, 2001a). Mission and vision of IKEA Vision of IKEA has been to create better every day for the clients. This was done by designing various products that would cater the needs of the buyers. The price offered to the buyers was affordable, and this made the company popular. Products sold by the company are eco-friendly, and is meant to benefit the users. Business idea of the company is to offer wide range of products that are exclusively designed by the manufacturers. The home furnishing product is less priced, as this would help in attracting maximum number of clients. IKEAs mission statement quotes that the products sold by the company would save money for the clients. Sales for the company has been planned to be increased through low priced products that can be used for multiple functional reasons. The designs are exclusively created by the manufacturers, and these factors give distinct features to the products sold by the company (Balmer, 2001b). Current strategies of IKEA IKEA has been one of the leading brand companies that have been selling quality and cheap products to the clients from different parts of the market. Through strategic planning, the company has been successful in entering into new markets. The management has proposed to accept the pricing strategies and product positioning factors through which the company can easily target the customers from different markets. Marketing strategy includes branding, through which the company create awareness about the products and services sold to the clients. The process includes implementing pricing method, through which the company plans to offer impressive priced services to the potential buyers from different markets. IKEA has adopted distinct business strategies that have enabled the company to develop. The current process includes creating strategy position for the products sold by IKEA. With the help of high quality of products and services, the company works towards developing product positio n. This would enable to create high value for the services rendered by IKEA. The company follows a combined strategy of innovative, value, experience, emotional, and benefits to the customers (Balmer, and Greyser, 2003). Present strategy for marketing The company follows branding theory, through which the design, value propositions, and implementing the positioning statement. IKEA has a reputed history of developing and selling quality and designer products to the clients from different parts of the market. The company provides required information to the potential buyers, as this will help in buying the products. Management of the company aims in providing accurate information to the clients, as this will help in making the better selection that will take care of the buyers need. The company has a simple logo, through which the products can be sold to the customers. Through this process, the company attempts to create a value for the products that is being sold to the clients. Value proposition has been created by the company by adopting and implementing an effective strategy for product distribution. With the help of such a method, the company proposes to reduce on the negative environmental impact that basically occurs due to the manufacturing process adopted by the management. The products are designed and presented to serve the needs of the customers. IKEA basically works towards creating brand image, which would help in approaching maximum number of clients from different markets (Berens, Riel, and Bruggen, 2005). The company aims to increase the efficiency of the products by introducing low priced products. Cost for selling the products are reduced by adopting lower transportation expenses. Perspective versus emergent approach for strategic planning In the emergent strategic management system, management actions are usually in the form of unintended style or pattern. The management of the company plans to adopt and implement effective strategies for drafting flexible plans. This is quite important for handling the changing market requirements and condition. The sales for the products are increased by analysing the needs of the clients, and implementing the right strategies for approaching the clients. The process includes developing positive relationship with the clients through effective communication method. Changing needs of the clients are analysed through market analysis. Through communication process, the company highlights the features of the services that have been rendered to the clients. The product range is one of the positive aspects of the company, through which the clients are attracted towards the products that has been sold by IKEA (Constantinides, 2006). The strategic factors help the company in analysing the problem and finding the solution to handle the sales for the management. IKEA has adopted tactical and formulated approach to handle the changing market needs of the customers. Strategic perspective plans are drafted after analysing the objectives of the company. The goals are defined and the steps that would be followed to accomplish the task is analysed. This would help the management in implementing positive steps that would increase the sales. The needs and preferences of the customers are analysed, so as to find the better methods to increase the goodwill of IKEA. Some of the strategic perspectives of the company include Introducing wide range of product options to the buyers Offering the products at the lowest possible price Retaining the clients, by offering or introducing lucrative loyalty programs (Demirdjian, and Turan, 2004). The company collects important information about the market strategies and the needs of the customers. Details include analysing the offers provided by the rival companies. The important information is collected from different reliable sources that include newspapers, journals, and financial magazines. Based on the collected information, the management draft effective policies for introducing customer driven market for attracting the clients. The promotional activities are undertaken through the conventional method, and modern process that includes social media (Erdem, Swait, and Valenzuela, 2006). 2. SWOT analysis of IKEA in relation to the competitors The competition in the industry has increased, and thus IKEA has planned to introduce better strategies for satisfying the needs of the potential buyers. IKEA is one of the leading brand names in the world that has been providing quality and reliable services to the clients. The prime objective of the company has been to provide attractive services that would save money and time for the buyers. IKEA has developed a strong business concept that offers lucrative offers for wide range of the products sold by the company. The demand for renewable products has increased and this has been one of the reasons for the increase in the sales for the company. Some of the competitors of the companies in the United States of America are Ashley Furniture, American Furniture Warehouse, and others. The services and the quality of the products sold by various companies depend upon the product verities and the price. SWOT or strength, weakness, opportunities, and threat analysis has been conducted to f ind the positive and negative aspects of the business house (Franzen, and Bouwman, 2001). Strengths Weakness Customer oriented services Improper publicity, that leads to negative advertisement analysis of the customers needs Quality factors Effective integration of the supply chain management system Standard products Wide range of products and services Increasing competition Brand building and reputed services Innovative products and services Opportunities Threats Constant expansion of the business to different parts of the world Increasing competition Effective strategies for online sales and marketing demand from the customers for lower priced goods and services Increase in the awareness of the products sold by the company demand for better products that would fit into the income group of the clients The company has to conduct the SWOT analysis to find the impact of the business due to the rival companies. These days, many companies strive towards manufacturing and sales of reliable products that would take care of the needs of the customers. The companies strive towards gathering the necessary information about the clients requirement. Such data are required as it would help the management to develop and implement effective strategies through which the business development plan can be introduced by the management. With the help of the information that has been collected by the company, the marketing team develop strategies that will influence the buyers. This is important from the sales improvement point of view. Thus, the company has introduced lower priced products that have stylish features. Such factors are meant to help the management in drafting the best possible strategies that would increase the sales. Through SWOT analysis, the company analyse the areas that needs to be worked upon for increasing the goodwill. The best practice process is also adopted and implemented by the company. This is meant to help in improving the performance of the company when compared to the competitors (Gioia, Schultz, and Corley, 2000). 3. Impact of current strategic factors on the organizational structure of IKEA The current strategic plan and organizational structure has positively helped the management to cope with the challenges that exists in the industry. Strategic position has been considered to be one of the most important factors, and the management has been able to retain the same. This has assisted in building positive brand image, for the management. Such factors are quite important for building positive relationship with the stakeholders. The level of competency level has been improved so as to cater the needs of the clients. In order to increase the level of sales and competition level, the company could work on the below mentioned factors 1. Introduce innovative products The Company specialised in introducing innovative products to the existing and potential clients. Eco-friendly products have been sold to the clients at a reasonably lower price (Gotsi and Wilson, 2001). 2. Brand image Through marketing mix, the company draft effective policies that would increase the sales for IKEA. Price, quality of the promotional activities, place to advertise, and products are analysed as this would help in building the brand image for the company. In this method, the expectations of the clients are analysed, as this will help in attracting the clients. 3. Analysing the customers need The structure has been designed to enable the customers to make the best selection that would help in improving the sales. In this method, the expectations of the customers are analysed. This would help the company in reaching maximum number of clients from different parts of the world (Gray and Balmer, 2001). Due to the changes made in the strategic plans, the manufacturing process for the furniture and accessories has been improved. The designs for the product are done in Sweden, and this has been proposed to keep the price of the products low. At present the company has suppliers in more than 50 countries, but still IKEA is working towards capturing larger share in the market. The strategic plan also includes developing and implementing an effective distribution method of the goods and services that has been manufactured by the company. There are more than 10,000 products that has been manufactured and sold through different suppliers across the world. In order to keep the transportation cost to the lowest possible extent, the company has introduced flat packaging system. This is meant to reduce on the purchase price, and secure the products while being transported to the clients (Hackley, 2003). In order to retain the clients, the company has introduced an effective loyalty based sales method for the existing clients. Through this method, the management proposes to reduce the price of the products and services by offering discounted price. Efforts have been made to introduce stylish products that would cater the needs of the clients. This is also essential to remain ahead in the competition, and the offers that have been provided by the rival companies. The durability factors and the value for the products are developed and communicated with the members. This has been done with an intention of increasing sales and customer satisfaction. Both the factors are necessary for successful business operational activities. In order to provide the best quality products and services to the clients, the company has hired an independent agency that would verify the quality of the products. This has been done with an intention of reducing the complaints that can impact the business perfor mance. The prime objective of the company is to ensure that maximum number of clients could purchase the products that have been sold by the company. For this, the supply chain management system, along with the supplier relations are improved. This is quite an important factor that would help the company to reach out to maximum number of clients, without losing much time and efforts on the same. Through such steps, the company also intends to gain an advantage over the rival companies that provides similar type of services. The products have been designed on the basis of DIY concept. This will help the users to design prediction and place it as per their needs. The company aims to provide maximum feasibility to the clients, as this has helped the business to develop. In order to increase the sales, the company has developed stores that can be easily reached by the clients (Hatch, and Schultz, 2000). The company takes feedback from the clients, as this would help in developing and implementing effective steps that would help in increasing the sales. The below mentioned changes has been introduced by the company 1. Introduction of global networking system 2. Sales of the products in larger volumes 3. Introduction of flat packages Maintain low costs for the products and services that have been intended to be sold by the company (Hatch and Schultz, 2001). Attempt is made to improve the efficiency of the products, and for this, the company introduced efficient method for transporting the products. IKEA is also involved in the activities for promoting innovative methods for architect field. For this, the company has assigned stipulated funds that would take care of the needs of the innovations. The company is also involved in different tasks that include managing charitable organizations and other activities. This has been planned and done for performing the social responsibility towards the community. The changes have been intended to be implemented after analysing the challenges and other factors that can directly affect the performance of the company. Social initiatives include getting involved in different social events that would benefit the clients and the community (Hatch and Schultz, 2003). Conclusion Marketing and operational strategies play an important role in the development of the company. Through branding, the company work towards building positive image about IKEA and the products that has been sold to the clients. Strengths and weakness of the company has to be analysed, as this will help in drafting the best policy that would cater the needs of the clients. The offers provided by the rival company have to be analysed, as this will help in introducing the best strategy that would help in implementing the changes that would help in improving the performance for the company. The company aims to become leaders in the manufacture of eco-friendly furniture and for this; the essential changes would have to be implemented by the company. The price and the quality of the products have been analysed, as this would help in approaching maximum number of clients from different parties of the world. References Allen C, Fournier S, and Miller F, 2006. Brands and their Meaning Makers, in C. P. Haugtvedt, P. M. Herr and F. R. Kardes (eds) Handbook of Consumer Psychology, Mahwah NJ: Lawrence Erlbaum Associates. Balmer J, 2001a. The three virtues and seven deadly sins of corporate brand management, Journal of General Management, 27 (1): 117. Balmer J, 2001b. Corporate identity, corporate branding and corporate marketing; seeing through the fog, European Journal of Marketing (special edition on corporate identity): 35 (34): 24891. Balmer J, and Greyser S, 2003. Revealing the Corporation: Perspectives on Identity, Image, Reputation, Corporate Branding, and Corporate-level Marketing, London: Routledge. Berens G, Riel C, and Bruggen G, 2005. Corporate associations and consumer product responses: the moderating role of corporate brand dominance, Journal of Marketing, 69 (3) (July): 3518 Constantinides E, 2006. The marketing mix revisited: towards the twenty-first century marketing, Journal of Marketing Management, 22: 40738 Ries A, and Trout J, 2001. Positioning: the Battle for your Mind, New York: McGraw-Hill. Demirdjian Z, and Turan S, 2004. Perspectives in consumer behavior: paradigm shifts in prospect, Journal of American Academy of Business, March: 34853. Erdem T, Swait J, and Valenzuela A, 2006. Brands as signals: a cross-country validation study, Journal of Marketing, 70: 3449. Franzen G, and Bouwman M, 2001. The Mental World of Brands: Mind, Memory, and Brand Success, Henley on Thames: World Advertising Research Centre Gioia D, Schultz M, and Corley K, 2000. Organizational identity, image and adaptive instability, Academy of Management Review, 25 (1): 6381 Gotsi M, and Wilson, 2001. Corporate reputation management: living the brand, Management Decision, 39: 99104 Gray E, and Balmer T, 2001. The corporate brand: a strategic asset, Management in Practice, 4: 14 Hackley C, 2003. Doing Research Projects in Marketing, Management and Consumer Research, London: Routledge. Hatch, M. J. and Schultz, M. (2000) Scaling the tower of Babel: relational difference between identity, image and culture in organizations, in M. Schultz, M. J. Hatch and H. Larsen (eds) The Expressive Organization: Linking Identity, Reputation and the Corporate Brand, Oxford: Oxford University Press Hatch J, and Schultz M, 2001. Are the strategic stars aligned for your corporate brand? Harvard Business Review,129. Hatch M and Schultz M, 2003. Bringing the corporation into corporate branding, European Journal of Marketing, 37 (78): 104164 Hatch M, and Schultz M, 2008. Taking Brand Initiative: How Companies can align Strategy, Culture, and Identity through Corporate Branding, San Francisco: Wiley. Holt D, 2005. How societies desire brands: using cultural theory to explain brand symbolism, in S. Ratneshwar and D. G. Mick (eds) Inside Consumption: Consumer Motives, Goals, and Desires, London: Routledge. Hultman C, and Shaw E, 2003. The interface between transactional and relational orientation in small service firms marketing behavior: a study of Scottish and Swedish small firms in the service sector, Journal of Marketing Theory and Practice, 11 (1): 11012. Karmark E, 2005. Living the brand, in M. Schultz, Y. M. Antorini and F. F. Csaba (eds) Corporate Branding: Purpose, People, Process, Copenhagen: Copenhagen Business School Press. Kirmani A, and Rao A, 2000. No pain, no gain: a critical review of the literature on signaling unobservable product quality, Journal of Marketing, 64 6679. Keller K, 2003. Brand synthesis: the multidimensionality of brand knowledge, Journal of Consumer Research, 595600. Keller L, 2005. Branding short cuts, Marketing Management, 14 (5): 1823. Keller K, and Lehmann D, 2003. How do brands create value? Marketing Management, 12 (3) 2631 Louro M, and Cunha P, 2001. Brand management paradigms, Journal of Marketing Management, 17: 84975 Martin J, 2002. Organizational Culture: Mapping the Terrain, Thousand Oaks C A: Sage Publications Mitchell A, 2004. Getting staff to live the brand: work in progress, Marketing Week, 2 September: 30 Mitchell C, 2002. Selling the brand inside: you tell customers what makes you great. Do your employees know? Harvard Business Review, 99-106. Olins W, 2001. How brands are taking over the corporation, in M. Schultz, M. J. Hatch and M. H. Larsen (eds), The Expressive Organization: Linking Identity, Reputation and the Corporate Brand, Oxford: Oxford University Press Schroeder J, and Salzer-Morling M, 2006. Brand Culture, London: Routledge 18 Setting the sceneSimon, C. J. and Sullivan, M. W. (1993) The measurement and determinants of brand equity: a financial approach, Marketing Science, 12 (1): 2852. Schultz M, Antorini Y, and Csaba F, 2005. Corporate Branding: Purpose, People, Process, Copenhagen: Copenhagen Business School Press Shultz D, 2001. Marketers: bid farewell to strategy based on old Four Ps, Marketing News: American Marketing Association, 12. Vargo S, and Lusch R, 2004. Evolving a new dominant logic for marketing, Journal of Marketing, January: 117. Vallaster C, and Chernatony L, 2005. Internalisation of services brands: the role of leadership during the internal brand building process, Journal of Marketing Management, (21): 181203. Wipperfrth A, 2005. Brand Hijack: Marketing without Marketing, New York: Portfolio.